Why Globo does not release its sports stars to competitors

It is no secret that the decline in TV revenues and the growth in licensing costs for sports rights has become unsustainable. It’s also no secret that YouTube and digital platforms have shattered the traditional media model that for decades made TV, radio and newspaper powerhouses.

To a large extent, the growth of sports costs in recent years was only possible thanks to the flood of “cheap” money in the market, with low interest rates worldwide and money left over from streaming platforms. Platforms “bought” market share by paying fortunes to have the big championships and attract more audience and subscribers even with heavy losses.

But the times of easy money are in the past. The streaming crisis, with the slowdown in subscriber growth, and the increase in interest rates around the world, even led Silicon Valley to a crisis, causing layoffs in big techs and even the bankruptcy of the SVB bank.

These are lean cow times. All major media groups have already announced cost-cutting measures. From Disney to Warner Bros. Discovery, passing through Paramount and tech giants like Amazon, Google and Netflix that have carried out tens of thousands of layoffs in recent months.

A new day, a new time

At Globo it is no different. It’s time to tighten your belt. But whether because of the economic crisis in Brazil that started much earlier than abroad, or because they saw further, the cuts at Globo started at least five years ago.

In 2018, Globo launched its UmaSóGlobo project “with the aim of being at the forefront of changes, in a context of accelerated transformations in the media business”. In practice, group companies were unified, vacancies extinguished and several properties were sold, such as the Som Livre record label, the station’s towers and even the company’s building in São Paulo. The result was a much leaner and more efficient use of capital.

Cost cuts were aggressive, as were new contract negotiations. Football, one of Globo’s biggest expenses, did not pass unscathed. The company did not renew championships, cut medallions from the sports area and gave up exclusivity, saving hundreds of thousands of reais.

From the business point of view, it was a wise decision and the movement of competitors in the same direction in recent months, including international ones, reinforces this point. However, this lighter structure also opened the door to new challenges.

Without exclusivity, it is necessary to be strategic

Galvão Bueno, Arnaldo Cézar Coelho (who was going to participate but later cancelled), Casagrande and Tino Marcos, synonymous with football on Globo broadcasting a national team game on YouTube, are an example of the risks of this new strategy.

Will the quartet, which will also feature influencers such as Felipe Neto, repeat Globo’s success? There will certainly be many articles and buzz about the novelty, but there is little chance that in the long term they will be able to replicate the commercial success of the Rio station, and mainly, pay the amounts that Globo paid to FIFA in the past.

For Felipe Neto, Galvão Bueno and company, by taking football to streaming they have nothing to lose and a lot to gain. But for sports rights holders and media companies, times are tough with soaring competition.

Free football can be shot in the foot

FIFA and other sports rights holders who put content at a bargain price on streaming have probably shot themselves in the foot. Once you drop the price or offer it for free, it’s hard to convince the user to pay, as newspapers and magazines have found on the internet by making content available for free for years.

Furthermore, the market is not difficult only for Globo and other traditional media groups. YouTube weeks ago changed CEO after announcing that for the first time in history its revenue had shrunk.

Google’s video platform, which in the United States also offers a paid version similar to cable TV filled with sports called YouTube TV, announced a 12% increase in the monthly fee, going from US$64.99 to US$72.99.

Amazon has laid off 18,000 employees and shows no signs of stopping. This week, it announced another 9,000 cuts. Netflix has already said it won’t have live sports until prices come down.

Even the mighty Apple has taken its foot off the accelerator. The iPhone owner is delaying bonuses for some corporate divisions and expanding a cost-cutting effort, joining Silicon Valley peers in trying to streamline operations during uncertain times.

Streaming giants like Amazon and Apple have closed long-term billionaire contracts with major American sports leagues in recent years. The NBA seems to be the last jewel in the crown available for a new agreement, but unlike the past, the favorites in the negotiation (Disney and Warner Bros. Discovery), now say that they will not go crazy to have basketball games.

The simple fact that Disney and Warner are favorites in the competition for the NBA is already a sign that streaming has lost steam.

Everyone defends themselves as best they can.

It is within this new context, in which Globo does not have hegemony in football and has given up the exclusivity of many games and professionals such as Galvão Bueno, that the executives of the Rio broadcaster need to navigate.

Obviously, this new scenario requires changes (many of them unpopular). Without championship exclusivity, Globo needs to be more efficient and optimize its properties. This week, for example, we learned that two talents linked to Globo were barred from competing activities.

Galvão Bueno said on the Flow podcast that he was upset with the fact that Arnaldo Cézar Coelho was not released to perform in the broadcast of the Brazilian team’s game on Saturday, on YouTube. “It wasn’t for him to work with me. It was a time to put together a 30-year-old duo. The deal was just to play the game. I was upset, but we’re going ahead”, said Galvão. Arnaldo would still have a contract with a Globo affiliate, which required the company to release its stake, which did not happen. Galvão also said that the broadcaster was not happy to learn that he would narrate a match for the national team on YouTube.

In the same week, columnist Gabriel Vaquer, from Notícias da TV, published that Globo would have vetoed the participation of presenter Carol Barcellos, a sports reporter, in a Banco Santander campaign associated with the Champions League. The competition will be broadcast on SBT, TNT and HBO Max and would not be broadcast on Globo.

As far as I found out, Globo was not even consulted about Carol’s participation in the Santander campaign. In any case, there was no way I would allow it. The broadcaster has been rigid in the sense of barring the entry of its contracted talents in the competitors for the simple fact that there is no reason to give ammunition to the opponents. If anyone at Santander or at any agency felt unwell, they probably don’t follow the market closely.

Galvão’s frustration is understandable. But from a business point of view, it doesn’t make sense for Globo to lift the ball from YouTube, competing broadcasters and not even Galvão outside the broadcaster, since on Google’s video platform the presenter will be a new competitor for Globo.

The smaller the audience of the selection game on YouTube, the better for Globo. It makes it easier for the broadcaster to prove to FIFA that, even though it pays less, the broadcaster from Rio remains the best alternative on the market. On top of that, it also shows the talents of the house that life outside open TV can be difficult.

By giving up the exclusivity of professionals and championships, Globo increased its efficiency and profitability. On the other hand, it left the door open to new competitors. Whether anyone will be able to take advantage of the opportunity in sports is a big question mark (in dramaturgy the competitors did not). Faustão is another example, as soon as the news leaked that he would go to Band, the presenter was taken off the air on Globo even before his contract ended and without saying goodbye to the public.

These are difficult times even for Globo. Don’t expect it to make life easier for competitors, especially those who were once icons of the platinum Venus.

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